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Money Times - October 16, 2018

Posted by Jill Kerby on October 16 2018 @ 09:00

PENSIONER’S BUDGET 2019 EXTRAS ALL ADD UP

 “Big deal. An extra fiver. And we have to wait six months for it,” the pensioner replied when asked by the radio reporter what he thought of Budget 2019 and his weekly pension going up to €248.30 next March.

It’s the same response from many after last year’s budget and 2017 and in 2016 when the seven year pension pay freeze finally ended and pensioners were awarded just a puny €3 extra a week.

Last week’s €5 hike is certainly a far cry from the pre-crash increases:  in 2007 pensioner’s pay rose by €16, in 2008 by €14 a week. The €7 increase in 2009 was met with derision, but it was paid just before the IMF and their other Troika partners arrived. The wonder is that they didn’t succeed in actually having the €230.30 weekly payment cut.  (Greek pension income continues to be plundered.)

Some other PRSI related pensioner benefits were partly clawed back in the post crash years, including the weekly winter fuel allowance, the telephone allowance for pensioners living alone and the bereavement allowance, which was worth €850 (it was only abolished after 2013.) The Christmas bonus was dropped in 2009 and only partly restored in 2015.  Meanwhile, pensioners on medical cards had to pay towards their prescriptions, even if the contribution was capped at €20 a month.

The seven year income freeze certainly took its toll for many as the cost of living rose sharply and austerity bit. Alcohol, tobacco were hit hard and the cost of healthcare, transport and energy rose. Meanwhile, deposit interest rates, on which may pensioner/savers have historically depended upon to boost low fixed their incomes virtually collapsed. 

For all the hardship imposed on the least well off pensioners, a number of valuable benefits remained, such as the free bus/train travel pass for all pensioners and designated companions (over 900,000 people, including those with disabilities enjoy this pass) and the Household Benefits Package for the over 70s and for many age 66-70 who live alone was mostly preserved.  

The package still included the free TV licence (now worth €160 a year) the monthly gas or electricity allowances worth €420 a year and the €2.50 a week phone allowance (€130) which was restored this summer for those pensioners living alone.

It has been estimated that the tax-free Household Package, free travel pass and Christmas Bonus (which will be fully restored in 2019) increase the value of the state pension (which will amount to €12,911.60 in the full year from March 2019) by as much as an additional 15% or nearly another €2,000.

Meanwhile, all over-70s – single or couples – are entitled in 2018 to a free GP card and can qualify for a full medical card with incomes of up to between €26,000 and €36,400 for a single person and between  €46,800 and €72,800 for a couple. No other assets are subject to means testing.

Ten GP visits a year alone can typically account for a €500 outlay; add five private consultant visits and the annual bill can easily amount to €1,000.

So in light of all these existing benefits, how did pensioners really fare in Budget 2019?

First, the extra €5 a week is worth an additional €260 over 12 months. The 2019 increase for a qualified dependent adult is €4.50 a week or €234 extra for the year.  

The full restoration of the Christmas Bonus this early December means that a qualifying single pensioner with a contributory pension will collect €486.60 or  €973.20 for a couple who each have the state pension. A pensioner with a qualified adult over 66 - a spouse or partner who does not have their own pension - will receive a double bonus payment this December of €922.60.

Assuming it is fully paid out again next year the full bonus week payment in December 2019 will be €492.90 (€985.80 for a couple).

For pensioners age 66-70, who are not automatically entitled to a GP card, dropping the income requirement by €25 a week or €1,300 annually could save them (if they qualify under the new income assessment) €500 a year, for example if they visit their GP ten times a year.

Prescription charges have been reduced by 50 cent per item. The maximum €20 a month charge still applies but this cut means that a pensioner with three prescriptions a week (or 12 a month) will see an annual savings of €84. The €10 reduction in the monthly Drugs Payment Scheme contribution (from a maximum of €134 to €124) means that pensioner households will save €120 a year.

All of these Budget changes add up.  State pension incomes may not have kept up with the rising cost of living and tax and levy increases since 2008, but small incremental improvements have been made each year since 2016.

Long may they last.

 

Letters to jill@jillkerby.ie  The TAB Guide to Money Pensions & Tax 2018 is available in all good bookstores. See www.tab.ie for ebook edition.) 

 

 

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